HSBC 2009 Annual Report Download - page 35

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2008 compared with 2007
Reported net earned insurance premiums amounted
to US$10.9 billion, 20 per cent higher than in 2007.
HSBC acquired the remaining interest in HSBC
Assurances in France in March 2007 and, in October
2007, sold the Hamilton Insurance Company
Limited and Hamilton Life Assurance Company
Limited in the UK. On an underlying basis, net
earned insurance premiums increased by 14 per cent.
Growth in net earned insurance premiums was
driven by a continued strong performance from the
UK life assurance business, mainly as a result of
higher sales of the Guaranteed Income Bond, a non-
linked product that was launched in June 2007. The
introduction of enhanced life assurance benefits to
certain pension products, which led to these products
being reclassified as insurance contracts, also
resulted in higher premiums.
The Hong Kong insurance business also
performed well with respect to premium growth, due
to stronger sales of products with DPF and an
increase in regular premiums partly offset by a
reduction in unit-linked premiums.
In France, HSBC Assurances performed well in
a declining market, as three promotional campaigns
during the year contributed to growth in sales of
policies with DPF. However, a significant one-off
reinsurance transaction undertaken during 2008
caused net earned insurance premiums to decrease
compared with 2007.
Other operating income
2009
US$m
2008
US$m
2007
US$m
Rent received ........................................................................................................... 547 606 630
Gains/(losses) recognised on assets held for sale .................................................... (115) (130) 5
Valuation gains/(losses) on investment properties .................................................. (24) (92) 152
Gain on disposal of property, plant and equipment, intangible assets and
non-financial investments ................................................................................... 1,033 881 213
Change in present value of in-force long-term insurance business ........................ 605 286 (145)
Other ........................................................................................................................ 742 257 584
Other operating income ........................................................................................... 2,788 1,808 1,439
2009 compared with 2008
Reported other operating income of US$2.8 billion
was 54 per cent higher than in 2008. This included
a US$280 million gain related to the sale of the
remaining stake in the card merchant-acquiring
business in the UK, compared with a US$425 million
gain in 2008 from the sale of the first tranche. In
2008 results also included gains of US$71 million
related to the sale of HSBC’s stake in Financiera
Independencia. On an underlying basis, other
operating income rose by 163 per cent, driven
mainly by an increase in insurance-related income in
Hong Kong, a rise in gains on property disposals and
lower losses on foreclosed properties.
Increased insurance income in Hong Kong,
higher gains on property disposals and
lower losses on foreclosed properties in the
US helped drive an underlying
US$1.5 billion rise in other operating
income.
Losses recognised on assets held for sale
declined as losses on foreclosed properties in HSBC
Finance decreased, partly due to lower inventory
levels following delays in the foreclosure process
and partly due to some stabilisation in real estate
prices.
Property gains of US$576 million were
recognised in respect of the sale and leaseback
of 8 Canada Square, London which was effected
through the disposal of HSBC’s entire shareholding
in Project Maple II B.V. (‘PMII’) to the National
Pension Service of Korea. In 2008, HSBC reported a
gain of US$416 million in respect of the purchase of
PMII. See Note 23 on the Financial Statements.
An increase in insurance sales to new customers
in Hong Kong resulted in positive movements in the
present value of in-force (‘PVIF’) long-term
insurance business. Further positive movements
arose from refining the income recognition
methodology used in respect of long-term insurance
contracts in HSBC Finance. In 2008, a similar
refinement in Brazil and HSBC’s introduction of
enhanced benefits to existing pension products in the
UK, resulted in favourable movements in PVIF.
In Hong Kong, a gain of US$110 million was
recognised in respect of a property disposal, and in
Argentina a gain was realised on the sale of the head
office building.
Other operating income includes higher gains on
the sale of prime residential mortgage portfolios in